Paying for Your Kid’s College (without Going Broke)

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Want to help your child graduate college with little or no debt? Learn how you can pay for your kid’s college expenses without ruining your finances. 

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Paying for Your Kid’s College Without Going into Debt

paying for your child's college expenses podcast

Paying for your child’s college education is a personal matter that many couples struggle with. If the two of you are thinking about opening up a college fund, today’s episode is for you.

We’ll start off with some costs to consider  so you have a better idea of how much to save in the college fund, how a 529 can help you, and finding the right one for your family.

Julie from The Family CEO has personal experience as her family pulled together and paid for their daughter’s college education so Lindsey could graduate debt free. What’s more impressive is that did this will only limited savings in the 529. I interview Julie to see exactly how they did this.

I wrap things up today with ways you can reduce college expenses without sacrificing quality education.

529s: Growing Your College Fund

According to College Board, the average total costs for undergraduates can range from $18,391/year with an instate student at a public university to $40,917/year for private nonprofit university.
For many families that’s a lot of money. The best way for them to get that ready is use a 529 to grow their savings.

A 529 plan, also known as a Qualified Tuition Program (QTP) is a tax-advantaged savings plan. Contributions to 529 plans are not federally tax deductible, but qualified distributions are tax free.  You may get additional benefits if you invests with your state’s plan. Some offer deductions for your contributions which can be very handy for your family.

Don’t be confused, your child isn’t require to attend a college in the state. 529 Plans can be used to pay costs of qualified expenses throughout the country. So if you’ve invested in North Carolina’’s 529 plan, you can still use that to pay for your child’s expenses in California or Texas.

Another advantage of using a 529 for college savings is control. Even though your child is the beneficiary, you manage the account.

To sign up for 529 for your child, you can go directly through a 529 plan manager (such as your state’s program) or you can use a financial adviser.

Cutting College ExpensesWant to help your child graduate college with little or no debt? Learn how you can pay for your kid's college expenses without ruining your finances.

Just because the two of you decided to foot the bills doesn’t mean that your child can’t pull their weight and keep expenses reasonable. As Julie mentioned, Lindsey paid a huge role withe her education by applying for scholarships and keeping her grades up to maintain them.

I have some ways on how you can work together and reduce college expenses. Not all of these ideas will work or appeal to you, but these have been incredibly helpful for other families.

Stay Local: Community College and In-state Schools

I’m going to start off with community colleges for the first two years and transferring to a university for the last two. Besides offering freshman/sophomore level courses at a fraction of the price of many local universities, many cc have classes schedules that are more accommodating.

Staying in-state can dramatically cut your tuition expenses. Here in North Carolina, Chapel Hill lists NC students tuition and fees for this year at $8,374 compared to $33,624 for their out of state classmates.

Test Out of Classes

Make the most out of high school and see if your child can take Advanced Placement or AP classes for some of their subjects. If they receive high enough scores on the exam, colleges can grant them credits, saving you significant time and money. It also has the added benefit of making them more attractive students for admission as they’ve proven they can handle the college level material.

Your child might also want to go ahead and take CLEP exams to get out of some introductory college courses. It’s a great way to save and it allows them to take a more in-depth course should they choose.

Merit Based Scholarships

Besides need based, there are tons of merit based scholarships your child can apply for. The key to getting the most bang for your buck is to have a specific system in place.  Ramit Sethi, a Stanford graduate and successful entrepreneur, gave advice on how he received $100,000 in scholarships.

Every dollar counts so encourage your child to do as much as they can with reducing college expenses.

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